Assume That the MPC Is 0

question 7

Multiple Choice

Assume that the MPC is 0.75, and investment spending rises by $25 billion.How much will real GDP change?

• A)$25 billion
• B)$75 billion
• C)$100 billion
• D)$175 billion

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Definitions:

Market Rate of Return

The average return on investment that is typical for a particular market or industry.

T-bill

Short-term government securities issued at a discount from the face value and maturing at par, used to finance government debt.

Issue Date

The specific date on which a financial instrument is issued or becomes effective.

Simple Rate of Interest

Interest calculated only on the principal amount of a loan or deposit, without compounding.